Russian central bank holds key rate at 4.25%

Credit: REUTERS/MAXIM SHEMETOV

Russia's central bank kept its key interest rate at 4.25% on Friday, putting its monetary easing cycle on hold amid increased risks of fresh sanctions against Moscow, but indicated a rate cut was still possible later this year.

Adds detail

Bank of Russia keeps key rate at 4.25%

Decision in line with expectations

Central bank says will study need for lower rates

MOSCOW, Sept 18 (Reuters) - Russia's central bank kept its key interest rate at 4.25% on Friday, putting its monetary easing cycle on hold amid increased risks of fresh sanctions against Moscow, but indicated a rate cut was still possible later this year.

The decision to keep the rate at a record low RUCBIR=ECI was in line with a Reuters poll that forecast Russia would keep the cost of lending unchanged following a slide in the rouble linked to geopolitical developments.

"If the situation develops in line with the baseline forecast, the Bank of Russia will consider the necessity of further key rate reduction at its upcoming meetings," the central bank said.

Lower rates support the economy through cheaper lending but can also increase inflation, the central bank's main remit, and make the rouble more vulnerable to external shocks.

"The recent reduction in the key rate will continue to support the economy this and next year," the bank said.

Expectations for the bank to hold the key rate grew stronger after the rouble slid to a six-month low against the dollar and its weakest levels since 2016 versus the euro earlier this month.

The rouble was at 75.06 against the U.S. dollar after the rate decision RUBUSTN=MCX, the same level as shortly before the announcement. Inflation expectations of households and businesses remain elevated, the central bank said, even though annual inflation was close to 3.7% as of Sept. 14, remaining below the central bank's 4% target.

Elvira Nabiullina, governor of the central bank, will shed more light on the central bank's forecasts and monetary policy plans at an online news conference at 1200 GMT.

The next rate-setting meeting is scheduled for Oct. 23.

Russia's key ratehttps://tmsnrt.rs/32GXYfZ

(Reporting by Andrey Ostroukh, Gabrielle Tétrault-Farber, Elena Fabrichnaya, Katya Golubkova; Editing by Mark Trevelyan)

((andrey.ostroukh@thomsonreuters.com; +7 495 775 1242;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More